2026 Legislative Session

SB 112 – Utah Exemptions Act Modifications

Sen. Todd Weiler

Official bill purpose:

This bill amends the Utah Exemptions Act.

This bill:

• Allows an individual subject to collection of an unsecured debt to exempt:
  • An unused amount of the homestead exemption in certain circumstances; and
  • Any federal or state income tax refund attributed to an earned income tax credit or child tax credit; and
• Makes technical and conforming changes.

Read bill details on the official state site.

Association notes/why we’re tracking this:

SB 112 makes two changes to the homestead exemptions available to individuals. The first exempts up to $10,000 of any unused portion of the homestead exemption to apply to an interest in personal or real property.  This bill should be opposed because:

1.  The Homestead Exemption is intended to give a debtor a fresh start with respect to housing.  The Homestead Exemption is not intended to give a debtor greater assets to be used to offset interests in other property generally.
2. The bill does not state how the individual is to receive the $10,000.  Is there a situation wherein a creditor or the bankruptcy trustee is to pay the debtor the $10,000.
3. How and when is the $10,000 amount to be determined?  Is it whenever a bankruptcy is filed?  Is it when an individual defaults on unsecured debt and claims the $10,000 can’t be collected from the individual?  Is it only when a bankruptcy trustee claims the individual’s property for the bankruptcy estate and proceeds to sell the property?
4. Except for giving the individual a $10,000 buffer between the individual and the creditor(s), what purpose is achieved?

The second exemption gives a person an exemption for the earned income tax credit or child tax credit the person receives on federal tax returns.  This part of the bill probably doesn’t affect credit unions directly.  We don’t know whether there will be an objection from the IRS.  One question is whether a credit union could claim the amount of the credit from the IRS before the exempt money was paid to the person.

The bankruptcy bar may be pushing this legislation.  For years, an exemption bill has been pushed.  The bills have largely been unsuccessful for several years and finally get passed.  The homestead exemption, for example, finally was increased about three years ago after several unsuccessful attempts.  This bill suggests that the exemption, as increased, was for more than the equity that people had in their residences.

This is a bill that will hopefully gather a coalition to oppose it.

Association posture on the bill:

Oppose

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